Bookmaker Paddy Power has posted a slip in full-year pre-tax profits, but said that trading in the first two months of its current year had been satisfactory and that it expected growth in 2006.
The company, which operates nearly 200 betting shops in Ireland and Britain, reported a 2.5% dip in pre-tax profits to €31.3m - in line with analysts' forecasts. It said that 2005 had been a challenging year.
The firm had warned in November that it was taking a hit from disappointing gross win percentages and poor racing results and expected year operating profit of around €30m, down from the €38m then predicted by analysts.
Paddy Power said its operating profit fell 3% to €30.1m while earnings per share dropped 4.4% to 54.08 cents. Revenue rose 18.3% to €1.37 billion.
It said its total gross win increased nearly 20% to €160.8m.
Operating profit at the company's online business, which has developed rapidly since it was set up in 2000, increased 92%, accounting for 56% of year earnings.
The board is recommending a final dividend of 12.84 cent per share, bringing the total dividend for the year to 20.59 cent per share, an increase of 10% on 2004.
Chairman Fintan Drury said that last year did not advantage bookmakers. 'This is not a moan. It's just a fact of life in this business. 2005 also witnessed structural changes in the Irish retail betting market,' he said.
'These two factors meant that, despite record revenue, the results were off where we would have hoped such a strong performance would have placed us,' he added.
Paddy Power said that its retail revenue grew by 15.3% in 2005 from €688.7m to €794.3m. Irish retail revenue grew by 12.1% to €703.7m from €628.1m in 2004. The company said that like-for-like growth rates within Ireland were 8.65%, reflecting the continued market growth.
The group's UK retail revenue grew by 49.4% to €90.5m, up €60.6m in 2004.
Paddy Power said that its online channel continued to see strong growth, with revenue increasing by 39.7% to €327.5m, up from €234.4m the previous year.
Casino and gaming products grew strongly with revenue from non bookmaking product totalling €17.2m, up €5.9m in 2004.This includes the rake income from Poker, which commenced in February 2005. 67% of revenue in the online channel comes from the UK, with the vast majority of the balance from Ireland.
Last year also saw an acceleration in the repositioning of the telephone business that commenced in 2004 as the company more and more focused on higher stake customers.
'Overall, whilst there are challenges facing all of our businesses, they are far outweighed by the opportunities that our market position and our own capabilities present. The strategy that has led to the successful development of Paddy Power to date is set to continue and I look forward to the future with confidence, commented the company's CEO Patrick Kennedy.
* Paddy Power also said today that it has appointed Jack Massey as its new Finance Director. Mr Massey (37) joins Paddy Power from ITG Europe, the European division of the NYSE quoted Investment Technology Group Inc., where he has been Chief Operating Officer since 2002.
He will join Paddy Power in April and be co-opted to the board on his arrival.
Paddy Power shares closed down 25 cent to €13.00 in Dublin this evening.
